Crazy? That's COOL!

It began as a well-meaning, right-to-know initiative to provide consumers with more information about the meat, seafood and produce they buy. It has turned into a veritable nightmare for everyone in the food supply chain. Country-of-origin labeling, commonly called COOL, is yet another regulation pushed by turf-guarding producers without considering the consequences. Congress obliged. In the House

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It began as a well-meaning, right-to-know initiative to provide consumers with more information about the meat, seafood and produce they buy. It has turned into a veritable nightmare for everyone in the food supply chain.

Country-of-origin labeling, commonly called COOL, is yet another regulation pushed by turf-guarding producers without considering the consequences.

Congress obliged. In the House version of the 2002 farm bill, the COOL amendment covered fresh fruits and vegetables. The Senate saw fit to add meat, fish and peanuts to the products requiring COOL — excluding chicken for reasons only they can explain.

Last fall, when USDA introduced the ground rules for the voluntary phase of the COOL program, it set off a firestorm of concerns that continue to spread throughout the U.S. food industry.

The trickle-down effects of COOL are becoming clearer. Retailers, realizing that every package of pork in their meat cases must be labeled with its country of origin, told packers and processors that they would be held responsible for documenting where an animal was born, raised and processed. Mislabeled pork could draw penalties up to $10,000.

Packers, recognizing that third-party verification would be needed, put producers on notice that they would be responsible for maintaining an auditable trail that would track all the way to the birth of each pig on U.S. soil.

COOL Costs

The National Pork Producers Council (NPPC), recognizing the considerable management and financial burden the regulations would place on producers, commissioned Iowa State University economist Dermot Hayes and industry consultant Steve Meyer, Paragon Economics, to analyze the impact on the industry.

Hayes and Meyer recently estimated the cost to implement a full traceback system to comply with the mandatory COOL program to be $10.22/market hog, the equivalent of a 10% increase in on-farm production costs.

Making matters worse, the economists say the net effect could be a 50% reduction in pork exports. Why? The Canadians will be forced to finish and process the 5-6 million pigs they would normally send south to the States. Instead of U.S. producers adding value to their corn and soybeans by finishing those Canadian hogs, our northern neighbors will do so, and compete for ever-critical export dollars.

Canadian pork producers are understandably irritated about COOL, too. Many farrow-to-wean producers expanded their operations so they could be reliable suppliers of high-quality pigs to the Midwest.

COOL Fallout

Although the Hayes-Meyer predictions are unsettling, I'm afraid the fallout won't stop there. If the five million early weaned pigs normally sent to fill U.S. finishers never cross the border, there will be a fair number of finishing barns sitting empty.

Short term that could be good news for U.S. suppliers of early weaned pigs and for the hog market. Competition will be intense for pigs to fill the 2-2.5 million empty finishing spaces. For easy figuring, I assumed those finishers are turned twice annually.

We all know that kind of demand will spawn a sow housing building craze to fill the void.

That'll be trouble. If we assume fairly high production from these new sow units, say 20 pigs/sow/year, it will take roughly 250,000 sows to fill the demand. And, don't forget, the Canadian sows that were producing those five million pigs for finishing in the U.S. will remain in production. We do not need another quarter of a million sows in the North American pork industry.

Now What?

The wisdom of the COOL regulations escapes me. U.S. consumers have not asked for this labeling provision. Most recognize ours as the safest, most nutritious food supply in the world. Generally, they have confidence in the U.S. packer-processor labels stocking their grocers' meat cases.

The regulation, as it currently stands, prevents the Secretary of Agriculture from requiring a mandatory identification and traceback system. But U.S. packers, openly opposed to COOL, have made it clear that they will pass the costs and responsibility for tracking the origin of animals back to producers. Producers, strapped with below breakeven margins for much of the past half decade can ill afford the additional financial burden with no hope of reclaiming the costs.

The official start date for the mandatory program is Sept. 30, 2004 — and it looms precariously large.

The NPPC has taken the stance that the impact of COOL was not fully studied and that Congressional hearings should be conducted. I agree. Call or write your Congressman. Press for Congressional hearings. Support other commodities feeling the pinch of COOL. At the very least, ask them to keep the program voluntary.